Nike Stock Tumbles on Cautious Q1 Outlook and Restructuring Plan
Nike shares plummeted by nearly 9% in extended trading on Thursday after the company reported mixed Q1 results. The earnings beat expectations, but revenue fell short of estimates and China was a major drag.
The company's top line came in at $11.21 billion, down 4% from last year. Gross margin also exceeded forecasts at 42.8%, while net income declined by 2% to $712 million.
Nike CEO Elliott Hill pointed out that the strong performance in North America was not enough to offset weakness in Sportswear, Jordan Brand, and Greater China. The company expects revenue to decline by a high-single-digit percentage in fiscal 2027.
In an effort to cut costs, Nike unveiled its Pace restructuring plan, which includes supply chain changes, a new campus in India, and regional groupings. This initiative is expected to yield $2.5 billion in savings through fiscal 2031 but will also result in layoffs starting next year.